Using cash can cary risk and reward
The biggest threat to my money is me
Rent is due and I don't have the money
Crisis adverted but the risk remains
Risks of using the envelope system
Loss: Could you loose your money. Yes I think I explained how I grew a healthy fear of this happening to my. Loosing my envelope system and all the cash inside created new habits. I embraced the fear of loss and I don't think it will happen again.
Robbery: My fear of robbery is pretty low. It will become even lower when my permit to carry a concealed firearm arrives next month. Robberies have trended toward non-violent. You may be robbed but at least you don't have to call your credit card company and file fraud claims for the next month.
Overspending: Budgeting and using the envelope system has actually helped me to spend exactly what I plan to spend. No more, no less than is in the budget. If you fail to follow your budget then it is not because of your envelope system. You have other problems that must be faced head on.
Limited acceptance: I have experienced no problems finding places that accept cash. I have had to adapt to avoid fees to use cash when paying bills. Walmart may assess a fee to accept the payment for the energy company. I just drive directly to the energy company and they gladly accept my cash with no additional service charge.
Rewards of using the envelope system
Accurate: If I want to know how much money I have I can open my envelope system and count my money. When I spend money it leaves the envelope and is gone. Try tracking your money with a credit card, you can't. With a credit card you are tracking your debt. Cash is accurate, always.
Convenient: When asked for payment I simply present enough cash to cover the expense. I usually only present cash after verifying that it is in the budget. If I present more cash than is required then I am given change. It simple, like how our grandparents did things when they were growing up. It just works.
Measurable: There is no simpler way to track your money then in the envelope system. Add an appropriate amount to each category. When rent is due, if you did your math right, the money will be there.
Increases savings rate: Savings rate is the leading factor in building wealth. You don't get rich by the interest rate in your savings account or cash back rewards on a credit card. Having money and adding that money to your savings is how you will build wealth. I have found that getting out of debt and using my envelope system has allowed me to increase my savings rate.